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China Social Insurance Introduction

Updated:2018-5-4 15:32:12    Source:www.tannet-group.comViews:606

China social insurance include five types, namely, pension, medical, unemployment, maternity and work-related injury insurance. China's new Social Insurance Law, which took effect on July 1, 2011, established the first national, basic social insurance framework for employees across mainland China. The law requires that all employers in China enroll each employee in five insurance programs, plus one mandatory housing fund.

For foreign investors who intend to set up businesses in China, one of the key aspects to understand is the costs of sustaining staff in the country. To do so, it is necessary to become familiar with China’s social insurance system. The system is complex because the vastness of the country means that local implementation of the rules and regulations varies greatly, giving rise to differing contribution rates as well as difficulties in transferring social insurance accounts across regions.

Importance of China’s Social Insurance
It is a system in which the state can obtain certain material help from the society through the legislative means to guarantee the laborer's loss of life source due to his age, illness, injury and unemployment.

The pension insurance, for example, the individual payment of workers all credited to personal accounts, the company payment should also draw a part into the personal account. After retiring, the principal and interest of the personal account will be returned to the employee on a monthly basis. In addition to this part of the "personal account pension", the employee's retirement benefits include monthly "basic pension" and annual salary adjustment with the society.

The benefits of other kinds of social insurance for employees are also obvious: employees who participate in unemployment insurance can receive unemployment insurance benefits for up to two years when they lose their livelihood. Industrial injury insurance can enable worker to obtain medical treatment fee, hospital expenses, disability compensation after an injury accident.

Five Types of Social Insurance
1. Pension
On the precondition that contributions have been made for at least 15 years, upon reaching retirement, an individual can receive a pension based on the amount accumulated in his/her individual fund.

2. Medical insurance
In the event of illness/injury, an employee can have part of the treatment cost covered by medical insurance. Contributions accrue to a card that can be used for pharmacy or  out-patient costs in government-approved hospitals and clinics (exclude international clinics).

3. Unemployment insurance
In the event of redundancy (not in the event an employee chooses to resign), on the precondition that an employee has contributed to unemployment insurance for at least one continuous year, the employee may claim unemployment benefits for a maximum of 24 months.

4. Maternity insurance
Maternity leave is usually three months and paternity leave is generally less than 15 days. In the cities in which maternity insurance is applicable, during a period od maternity or paternity leave, salary is not required to be paid, rather the employee receives a fixed sum from this insurance fund.

5. Work-related injury
The work-related injury fund covers the cost of treatment should an occupational injury occur. The employer must pay some salary during the period of rehabilitation and, if the employee cannot return to work, compensation must be paid.

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